The Competition Commission (CC) has confirmed the banning of payment protection insurance (PPI) sales at the point of credit sale for seven days and introduced a wide range of rules governing the product.
The ‘point of sale prohibition' is longer if a personal PPI quote is not issued until later as there must be a seven day gap between the quote being issued and PPI sale.
Regulations controlling its sale also included requirements to provide a personal PPI quote setting out the cost along with details of the cover provided and give information in marketing material about its cost and ‘key messages', for example making it clear that PPI is optional and available from other providers.
The publication confirms those measures finalised by the Commission in January 2009 following its review into the product's sale.
Other restrictions imposed were:
• to provide information to the Office of Fair Trading (OFT) and the Consumer Financial Education Body (CFEB) for monitoring and publication;
• a recommendation to the CFEB that it uses the information provided to populate its PPI comparison tables;
• an obligation to provide information about claims ratios to any person on request;
• a prohibition on the selling of single-premium PPI policies;
• an obligation to provide an annual review setting out the cost of PPI and including a reminder of the consumer's right to cancel;
• compliance reporting requirements, including commission of independent ‘mystery shopping' exercises by the largest providers.
Some of the information requirements will come into force on October 1 and the point-of-sale prohibition and other measures on April 6 2012.
Peter Davis, deputy chairman of the Commission and chairman of the PPI inquiry urged providers to mend their ways.
"Insurance to cover periods of unemployment, sickness and following accidents can serve a significant need in our society," he said.
"The team at the CC has worked hard to document the serious failings of competition in PPI markets and subsequently establish a package of significant market interventions whose aim is substantially to improve the operation of these markets.
"If providers properly seize this opportunity to provide good value insurance products to their consumers then, as a result of these market reforms, we can all look forward to a far better functioning market for this important class of insurance products," he added.
Complaints about PPI are currently the most common issue received by the Financial Ombudsman Service (FOS) and FSA is contesting a British Bankers Association judicial review into the handling of new complaints on the matter.
